OpenSkies.Travel, a Business Travel
Coalition initiative, is concerned upon learning that U.S. airline CEOs are
endeavoring to schedule meetings in late January with the White House and the
Secretaries of the State, Transportation and Commerce Departments to begin a push
for modifications to hard-won Open Skies agreements that would erect barriers
to foreign airline entry and expansion in over-priced and underserved overseas
to U.S. markets. In seeking to erect obstacles to more and better service,
these airlines are emulating some European airlines that have successfully pressured
their regulators in Brussels and at the national levels into the view that
commercial protectionism is preferable to market liberalization. There are
indications that U.S. airlines intend to endorse language based upon a European
Commission (EC) initiative – a new “Fair Competition” clause for existing and
future aviation agreements.

The legal gambit is that the EC has formally recommended
that this new provision be added to its current aviation agreement with the
Gulf States. (See EC Fair Competition Clause at http://btcnews.co/1uHeFkN.) At
paragraph 9 it authorizes a Party (i.e. a country) that "finds that an airline is being subject
to discrimination or unfair practices... and that this can be
substantiated" to "submit observations" to the other Party; if
consultations do not yield "a resolution of the matter," the first
Party "shall have the right to suspend the exercise of the rights
specified in this Agreement by the airline(s) of the other contracting Party by
refusing, withholding, revoking or suspending the operating
authorization/permit, or to impose such conditions as it may deem
necessary."

Cutting through the legalese, here’s how incumbent
U.S. major airlines could and would abuse this new provision. Suppose the U.S.
persuades the United Arab Emirates to insert this change in the current
bilateral Open Skies agreement, and let's further postulate that Emirates
Airline announces plans to up-gauge its Washington Dulles International Airport
service from a Boeing 777 to an Airbus 380. United Airlines then complains (and
Delta Air Lines and American Airlines join in); the U.S. government requests
consultations about the potential “unfairness” of state investment in the
airline; talks are held but there's no clear outcome after 30 days; the U.S.
Department of Transportation (DOT) then either leans on or unilaterally directs
Emirates Airline to delay the introduction of the Airbus 380. Many cities that
have lost substantial access to international markets in the last six years of
U.S airline mergers and capacity cuts could anticipate being victims of the
same airline tactics. That would represent the antithesis of Open Skies
agreements and consumers would be greatly harmed by a restraint on capacity and
full-throttled competition.

Consumers - individuals as well as corporations,
universities and governments that purchase commercial air services - have a
huge stake in preventing this airline scheme from succeeding because in a
radically consolidated U.S. airline industry, new airline entry is one of just
a few available remedies (along with the need for enhanced DOT consumer
protection rules and reforms to or abandonment of the preemption doctrine in
the Airline Deregulation Act - legal immunity that denies aggrieved travelers
any judicial remedies for airline service failures and even for unfair and
deceptive acts) to protect against high fares and a loss of customer service
and innovation, to say nothing about replacing lost scheduled services to many
cities and creating new jobs.

Newly omnipotent mega U.S. airlines would appear
emboldened to reduce price transparency, undermine DOT’s consumer-protection
and Open Skies authorities and erect an iron curtain around the U.S. to
frustrate new entry and expansion by foreign carriers. Indeed, in this case,
airlines’ newfound monopsony power is being projected not in the traditional
practice against supply chain participants, but rather against DOT, their
regulator.

Examples include:

1- drafting and then
railroading through the House of Representatives H.R. 4156, the Transparent
Airfares Act of 2014, to obfuscate prices and undermine DOT’s consumer
protection authority;

2- blocking Norwegian Airlines
International’s application to provide new low-cost services to the U.S. by endeavoring
to intimidate DOT and seeking Congressional intervention to block foreign
carrier new entry; and

3- pressuring the Obama
Administration into modifying Open Skies agreements in order to further
frustrate competitive entry and protect the status quo.

Most U.S. airlines fight hammer and tongs to block
“government intervention” in the marketplace to create or enforce consumer
protections, but they lobby for the most heavy-handed and pernicious kind of
intervention – old-fashioned commercial protectionism, which greatly harms
consumers and the competitive structure of an industry.

The White House and the State, Transportation and
Commerce Departments should reject this protectionist scheme and uphold our
country’s commitment to Open Skies for the benefit of our consumers, communities
and economy.